That September drop you were expecting for gasoline prices? Don't hold your breath.
Currently, gasoline averages $3.55 a gallon nationally, down from $3.63 a month ago. Most analysts had expected a drop to about $3.40 by early fall, as seasonal demand slumps after the summer driving season.
Not now. Some forecasters predict a short-term spike of up to 10 cents a gallon.
Crude oil prices and gas futures soared the past three days amid growing fears that if the U.S. military strikes back at Syria for its unacceptable handling of civil unrest intervention, one consequence could be an oil supply disruption out of the Middle East.
The price of crude oil rose $1 to $110 a barrel Wednesday in futures trading on the New York Mercantile Exchange. The wholesale price of gas -- as measured by futures contract trading -- climbed 1% to $3.06 a gallon. Consumers typically pay about 60 to 75 cents more a gallon at the pump.
"In some portion of the country, those increases are translating into a few bumps higher, and in other areas, the slow drift to lower (pump prices) has been put in limbo,'' says Tom Kloza, chief oil analyst for price tracker gasbuddy.com.
"Bottom line, we'll be paying perhaps in the low $3.60s this weekend, and God willing, the last 120 days of the year should see prices at or below those levels, once crude calms down and sellers return to the global crude market,'' Kloza says.
Syria isn't a major oil producer - its output is less than 100,000 barrels a day vs. about 400,000 before its civil war started two years ago. But oil prices have been rising since July, when tensions in Egypt began raising concerns over supply through the Suez Canal.
The region was already under pressure before Syria's uncertainty caused crude to spike. Civil unrest in Iraq is rising again - more than 1,000 Iraqis were killed in July, the highest monthly death toll since 2008. And Libya's oil production is already down sharply due to worker strikes over pay. Libya's deputy oil minister says protests by security guards have slashed oil exports to just 300,000 barrels a day vs. 1.6 million barrels prior to the 2011 war that toppled dictator Moammar Gadhafi.
Some industry observers, such as Societe Generale oil analyst Michael Wittner, suggest rising tensions could cause crude oil to briefly spike to $150 a barrel if the Syrian conflict spills over to major oil producers and causes larger supply disruptions. Crude oil last approached those levels in July 2008.
Still, Wittner says any spike would be short-lived, due to the demand destruction caused by the price rise and steps taken by other oil producers, namely Saudi Arabia, to pump more oil to make up for any shortage to dampen prices and reduce harm to economic growth.
Kloza, however, doesn't see $150 a barrel oil, given weakening U.S. demand and falling prices of ethanol, which makes up 10% of most domestic motor fuels.
"Under most scenarios - but perhaps not the scenarios proffered by banks or hedge funds with plenty to gain from oil price escalation - I believe $115-$120 a barrel is probably a ceiling for this crude oil rally,'' Kloza says. "But until we have the (Syrian) attacks, and more importantly, the reactions, pricing points for crude are an intellectual abstraction."
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